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Peak Shale: Not so fast!

Mark Hinaman

Monday, April 17, 2023

Chris Keefer  0:00  

Actually, I've gotten nothing on you in terms of yourself description. I keep it brief, but who the fuck are you again? What do you do?

That might actually be the intro. Welcome back to the couple. Today I'm joined by Mark Hanuman. For all the listeners that compare, sorry that complained about my swearing. Apologies for the introduction Marki recently reached out to me, letting me go, you reached out to me. After this most recent episode on so called Peak shale with Lee gearing, that episodes got a lot of attention, a lot of views. I found it personally interesting plays into my biases. We'll get into that later. But you got in touch with me, you had a really detailed bit of feedback there. So you've been sort of circling around there and the peripheries people have wanted to get on the podcast. So good to finally have you on Mark. Thanks for being here on the council.

Mark Hinaman  0:51  

Absolutely. Yeah. Thanks for having me, Chris, quick background here. Who am I? A quick 10. Second is licensed professional engineer, passionate about producing energy for American the world. I've made a career out of that in the oil and gas sector, upstream oil and gas sector, living in Colorado my whole life in the United States, and passionate about all forms of energy, but primarily those that are most energy dense. I think they're the best. And so I love oil and gas, but I love nuclear even more. So I spend my days designing and supervising frack jobs and have spent a career working on kind of industrial grade projects, and the oil and gas space, but also grew up doing a lot of dirty jobs. But now passionate about I spend kind of my nights and weekends advocating for nuclear energy and want to understand how we can build more.

Chris Keefer  1:39  

Yeah, I mean, I love having people on that are not from like the energy modeling world that have gotten their hands dirty. In the past, I haven't had a ton of LNG people on but you know, there's no prohibition on having people on that work in the sector. been very clear about, you know, having a diverse array of guests and no kind of canceled culture bias. And we'll talk about, you know, the climate issues and things like that. But, you know, nuclear is quite limited in terms of, you know, new deployments, particularly in the West. And obviously, the fracking industry is active, it's doing stuff, there's there's things to be learned from the sector, that apply over to nuclear. You know, we'll try and figure out to what degree they can be applied. But yeah, just just thrilled to have you on man. So maybe a good lead in is just your reaction to toward previous episode, peak shale. What's What's your take on what Lee gearing had to share?

Mark Hinaman  2:34  

I'll say while I was listening to it, I agreed with probably 90% of his comments. And I thought he did a great job characterizing a lot of a lot of what oil and gas is, which was awesome, and a given excellent history. But some things that stood out were what let's start with, we can't do this elsewhere. I agree that, you know, the shale revolution occurred in the United States. And I think that's primarily driven by property rights, and people being able to gain and have financial incentives to go and try new stuff. And that's, you know, somewhat unique to the United States. I think that existed elsewhere, then that could be it could be more common, but I don't think it's a question of geology. And that's just because when I look at how the shales dif differed from the Bakken, to the DJ to the eagle, furred to the Permian, and I had kind of a front row seat, my career Washington has evolved, I've worked in each one of them. I've drilled wells in them and been a part of looking at, you know, what makes these wells productive? What makes them tick, what makes them? How can we optimize them. And we watched this evolution, where we learned a lot, meaning the industry learned a ton. And by the time we got to the Permian, which is the best, it's by far the best, there's just so much resource there. We knew enough that it was really more of a manufacturing business, kind of like, you know, you start cutting down trees and a sparsely wooded area, and then you walk into a huge forest that you can harvest a bunch of trees, maybe that's a bad analogy, but

Chris Keefer  4:12  

when people get really good at cutting down trees and innovative ways, yeah.

Mark Hinaman  4:17  

But you know that and so when I think about what we learned over the past decade in the shale revolution, I find it challenging to believe that it can't be done elsewhere from a rock type and geology, avail availability, and if we took the know how the technology, the people, the human capital, to other countries, we could absolutely do it.

Chris Keefer  4:40  

I mean, it's interesting in a world in which AI is gaining increasing prominence, you know, there's this thinker, Noah, you've all heard very, very well known for his book sapiens. He talks about kind of the, you know, the human tendency universally to have a kind of religious framework, and what we worship are these sources of authority. Really, whether it's priests that have, you know, in a very energy scarce society, you want to be energy determinist, you know, have a higher level of education. So they're, you know, who the common people society puts trust in. And now, you know, algorithms are outperforming us. And that can be as simple as just the GPS system in your car. That's a bit of a meandering statement. But, you know, what Lee was was claiming is, you know, they've developed this neural network that's been able to process a lot of data and crunch it. And again, I always have, you know, it's a bias of mine, but a tendency to be suspicious of folks that are outside of getting their hands dirty and more in the modeling sector. Obviously, that's a bias. And I need to always be careful to challenge my biases. But what did you What did you think about that? Because that was, I think, the source of the source of authority for what he was saying, you know, we've asked the AI and the AI told us it was like,

Mark Hinaman  5:48  

my response to that is, I mean, we use a an AI models in our planning and development and look backs, we're using one right now to plan some of our new development. And I mean, I'm integral in that process and devising a strategy of how many wells do we drill? Which zones do we target geologic zones do we target. And the challenge with a lot of models is if you don't have a lot of data points on either ends are in the bounds, then they can, you know, triangulate to where the groupthink has been for a long time. And so that's true with humans. And that's true with AI models, too. So, and I love your analogy of the profits. I'll say, historically, geologists have been the profits in the oil and gas industry. And they say go drill here. And I say that affectionately, meaning my dad was a geologist, he spent his career Wildcat ng go and drilling wells all over the place, North Dakota and eastern Colorado, his own company, but when I've come to learn in the past, especially with shale is many of the conventional beliefs that were held by geologist and you know, where to find oil, how to find oil, or just not true meaning, for whatever reason, when we use this technology and these techniques, some of the rules of thumb don't apply. One example that Garin gave was clay content. You know, if there's a high clay content, and lots of water in the clay, your fracking technique may not work. That's 100%, not true. Evidence of wells that we've drilled, that have high clay content, and they are barnburner. Wells, meaning they they're very, very productive, very prolific. So yeah, that comes to mind and just thinking again, the International question. So Mike, my context for this, it's been fascinating to see how America has pulled ahead in the space. And the rest of the world seemingly hasn't caught up or paid attention, which my story behind this is in 2018, I was accepted to go and speak at a conference in Monaco, which was awesome, very, very lucky opportunity. But it was a global conference oil and gas conference hosted by Schlumberger back when they're still called Schlumberger, so it's the largest oil and gas service provider in the world. Folks from the US were the only ones there that were talking about shale and unconventionals. This was three, four years ago. Everyone else in the world was still focused on old technologies, vertical wells, and they were doing awesome things and produce a lot of oil, but they just hadn't looked at any of the new technologies. And so when I talked to people and say, Well, have you guys thought about horizontal drilling? And have you worked with your geologists on it and done mapping in any of the seismic and looked at, you know, how they can be more productive? And the general answer was, well, we're kind of ignorant about that. We don't really understand it, we, you know, we'd love to learn. And so people would come to the US booths and try and learn about it. You know, the vendors that were selling the technology there would educate people. And the strangest thing to me, which now, in hindsight, doesn't seem so strange. But at the time, I was apparently ignorant of geopolitics was any of the unconventional plays or areas in the conference. There was one country that wasn't allowed to go on. Look at the technology, which was Russia. They literally had it blocked off and you know, your passport? Yeah, yeah. If you had to show your badge and you know, your country and like to get into the unconventional area, which is like what I thought the Cold War was over. Why is it still had, you know, and so, that was a very interesting learning.

Chris Keefer  9:13  

But I think the way I want to take this is to interrogate again, that peak oil thesis, you know, are we there? Did we get there in 2018? Because it's very relevant to, again, one of the other biases that I hold. shale revolution pretty miraculous, unlocked a ton of energy had a bunch of economic benefits. And I guess climate benefits in terms of helping to swap out coal. But in terms of my thesis of, you know, what gets nuclear deployed and what spurs innovation whether its technological, but probably more importantly, regulatory is pragmatic issues of energy security and fossil fuel constraints. So if you look at you know, other than the US, you know, which was a real pioneer in the technology and maybe had other motivations, Atoms for Peace or whatever for their deployment, although I understand coal got pretty expensive in the early days. So nuclear actually was financed. It's really attractive. But in a lot of other areas in my country, for instance, you know, or the nuclear got built in Ontario, we didn't have, you know, and then it's the French line, like, we do not have oil, but we have ideas. So Ontario, France, you know, Japan, you know, the burned up most of its coal and its rapid industrialization period, you know, South Korea, that's a functional Island, and doesn't have a lot of endogenous fossil fuel reserves. You know, even China, they have lots of coal, but not in the in the southern coast, where the population bases are. So this is what drives nuclear deployment. And, you know, we make the regulatory changes, like I have no doubt if the US was fossil fuel constrained, like nuclear is the best swapping, it's not perfect, like OMG still still is the most, you know, I don't need to explain this to you, obviously, but just you know, my dear listeners, the most versatile form of energy that we have, we live in a fossil fueled civilization. But if you ain't got it, nuclear is your second best to fulfill, you know, at least a lot of the stationary roles, certainly electricity production, maybe some process heat stuff, if we allow it. But, you know, the motivation to change the regulations, and to fund and deploy fundamentally seems to be energy scarcity. So that's why I'm personally, you know, in a kind of Doomer, way, being like, oh, hopefully, peak oil is here, despite knowing that it's going to be like hell for civilization. So there's my biases, your thoughts about peak oil? I mean, I'm guessing you're gonna say it is inevitable at a certain point, but timing is everything in terms of planning. What's what's your take?

Mark Hinaman  11:31  

So I may be too deep in the forest, or too deep in the trees to see the forest. Right? Meaning my exposure currently is in the Permian Basin, we're looking at how many more wells, can we drill on our existing assets? How much inventory do we have? And you know, it's not infinite, the shale wells are not infinite. There's a limit for how many you can drill and there's a limit to how many zones and how productive they'll be. That's something that is radically true is supply and demand is always there. And so I think it's what it what is peak oil, at what price is probably maybe a better question, and how much do people really want that raw material? from an energy perspective, you know, I think it'd be awesome. If we transition to nuclear tomorrow, and stop lighting, the stuff on fire would be really helpful. But we, we still use the raw material for to drive our industrial society. And until we have a feedstock replacement, which we could do with abundant nuclear, you know, an abundant cheap energy, you can change the feedstock of crude oil to just be air and water. But until we do, then it's the stuff is super valuable still. And so if you're asking me to put a date on peak oil, everyone's always wrong. But I'd say there's another five to 10 years of opportunity for growth, just from the Permian Basin alone, and maybe not growth, I don't think the US peaked at the top point 8 million barrels a day. I don't think we'll get much above that. But I wouldn't be surprised if prices hold above 7080 $90 a barrel. We maintain that production level for the next two to five years, if not increase it up to 13 or 14 million barrels a day. But remember that I tell people this a lot, there's not a lot of differential in the global supply demand curve for oil. Right? It's it's one to 2% spread, so 100 million barrels a day, the US is doing 12 13 million barrels, if we go up to 13 14 million barrels, then that totally flips the supply amount, you know, and throws the market upside down. And then it's not as valuable anymore, and people have to use it. And then there's a recovery period. So but as far as just inventory in the US, I do think we'll run out of core to your inventory in the next five to 10 years in the Permian Basin. But there's going to be it's that's a lot. It's, it's a ton. And for to add on your question of well, does that help deploy nuclear and how do we deploy nuclear faster? I agree with you that, you know, there's this national security piece that's important to think about, and it's a big driver for a lot of countries right now. But really, it's more of an energy security, how do we have energy that's dependable, and that's very important. But then I always say incentives drive the world. And if it's profitable for somebody to build nuclear, then they'll build it. Which I think regulations are a huge hindrance of that. But I think the industry itself also has been a huge hindrance. And then the kind of the, we can get into detail about then some ideas on that, but and how I compare it back to oil and gas, but one, one thing that came to mind immediately before I call was, you know, shale wells cost anywhere between five and $15 million apiece to draw. And when oil was, you know, 5060 bucks. Some of them in the eagle furred in Texas were an economic But many in the Permian Basin now are still economic at $15 million piece, right? So you can invest, we'll just say 10 million bucks into some of these wells. And within three years, you've made five to six times that back. I don't really know of another industrial grade project, you can invest 10 million bucks over and over and over again. And within three years, double, triple or five extra money. And so if that opportunity existed in the nuclear space, which I think it should, and the physics support it, and I 100% support it, and I want to change this about the industry. How do we get out of our own way and leverage this fuel on this technology to actually realize even better returns than what we can do with oil and gas? That was peak oil, too? Yeah. How do we, we can dive in on any of those?

Chris Keefer  15:49  

For sure. Yeah. Again, I hold fast to this thesis that without a pragmatic energy shortage reason the regs won't get changed. And you as you mentioned, it's multifactorial, but the regs regulations are just such a huge part of what what holds back nuclear, whether it's in these kinds of micro oil and gas, huge, right, huge

Mark Hinaman  16:07  

and irrationally, so they shouldn't be more strict. It's safer technology, in my opinion.

Chris Keefer  16:12  

Okay, so I'm learning a lot about oil and gas are similar and a little about oil and gas, I'll be honest, they're starting from nothing. So we've had a few guests, we had BF Randall on talking about diesel and diesel engine as the pump and diesel fuel as the lifeblood of civilization running all of our kind of heavy machines, so vital to transport, mining, etc. That really brought that into my awareness. And then I've heard this thesis and I want to double check with you. That, you know, certainly the US is importing a lot of heavy oil and the refining. Industry is built up around that oil. So you know, it's more complicated in the saying that the US is now kind of energy dependent, independent when it comes to oil. But you know, the things I've heard is that we're quite short on diesel. I don't know if there's a strategic diesel reserve, but I've heard numbers like we have 30 days of diesel in the US. That's a concern if it is the lifeblood. So the question is, does fracking produce like a lighter, sweeter oil that is going to have less of that mid distillate? Are we going to end up like, What about like peak mid distillate, you know, beyond beyond peak oil, because even we had not we had but I've talked with, you know, art Behrman about this, but saying, you know, what we call oil is, you know, used to be kind of 90 100% was actually crude oil. And now 40% are natural gas liquids or sorry, like 40% are, you know, the majority of natural gas liquids, ethanol, other things. But yeah, let's zone in on that question. Are we kind of going to hit peak, mid distillate, which again, drive, you know, heating oil, diesel, jet fuel, etc,

Mark Hinaman  17:44  

right. I wish I had a better answer for you on this, Chris, I'll be able to provide my perspective, which is mostly upstream, midstream, and some exposure to downstream. But the you bring up a good point, right? What is this distillate? What's the difference between crude oil and natural gas? It's all hydrocarbons. It's just a matter of how many carbons are in the chain. And yeah, the the oil that's produced out of shale wells is typically lighter hydrocarbons, meaning fewer carbons in the chain, because it's easier to get them through the small cracks that we generate when we fracture rocks. And that's the predominant reason for why that exists. You can still use it as a feedstock in some refineries to make your different products. But yeah, diesel is a heavier product. It's has more carbons, right? And so you're gonna need to have the heavier crude available for it. And I've seen, certainly the diesel shortage are reflected in the pricing of diesel for operations. It's, it's very expensive, expensive to brag fuels, one of our highest cost items. I don't know that that gets transformed or reversed. So just I totally agree with you that diesel is the lifeblood for industry. And because it's the most easy to distribute, you know, there's millions of engines that have been deployed globally, to use it. And I don't know if there'll be a flip on it, but I suspect that the economics will drive, if people keep buying, they will. It'll be more expensive to import, then we'll have to import it from elsewhere. And the spread on it, you know, the refineries will still have to import fuels to be able to distill it and create it. And I think the downstream effect of that is the diesel price remains high, which I think for nuclear is a good thing, particularly for micro reactors and being able to deploy micro reactors and to displace some of these diesel engines. So think about what is the lowest hanging fruit for energy replacement, it's diesel generators, and how what what stands a chance to displace diesel generators while only a more energy dense fuel, so, okay, maybe you could replace with natural gas But you certainly can't actually that's happening all the time. We're doing that in industry. But that has its own supply chain hurdles. But yeah, cost. displacing diesel first is probably your

Chris Keefer  20:11  

best option. Yeah, I mean, so interesting anecdote from my backyard, we have a territory in the far north, I believe, like 15 to 20,000 people, heavily dependent on heating oil and diesel. And, you know, when when fossil fuel prices got expensive, early 2000s, you know, they were spending more than a quarter billion on their energy needs. So, you know, we're pretty excited about the possibility of micro modular and obviously, you know, can't build natural gas infrastructure to serve tiny communities. So, you know, and aside, but I think an interesting one in terms of a niche application. So, Mark, we've as I said, we've we've had some, I think, good descriptions, certainly about the natural gas masterclass, with Mark Nelson, which was more, I guess, downstream. I think the gearing did a great job of describing, you know, the kind of theories around fracking, and you know, how the technology works. But what I love about having a guy like you on is that you can give us this kind of visualization of what it actually looks like. And what I'm what I'm really interested in is just how it's unique or different versus traditional oil and gas. And you talked about drilling horizontal wells, but really, from the perspective, kind of what it looks like, what does the landscape dotted with these wells look like? What are the pragmatics of you said, like a lot of and you got to put a lot of energy into, you know, busts, these fractures through the rock. So maybe you can kind of take it from there to talk about those dances. Yeah, I

Mark Hinaman  21:32  

can I can give kind of high level overview for the listeners. Well, and I loved Gary's question. You know, it's, it's complicated, so we can't export it. You know, we think about who's making all this happen. And I involuntarily almost said out loud when I listened. And I was like, Well, we are, right. The the engineers, and most importantly, the guys on the ground boots on the ground, guys that are actually, you know, turning wrenches and driving driving trucks and piecing all of the steel together to actually make it happen. So in the industry, there's kind of we think of the will say, well, construction process in oil and gas development process, we've bifurcated into several different sectors. And we just call it when it's drilling completions, which is synonymous with fracking, facilities, and then production. And those are kind of the four pillars of operation, operational activity for upstream oil and gas. So in conventional plays, drilling is very similar, it's almost the same, we just use different tools, but it's this huge drilling rig, which can be I'll characterize these different phases of the lifecycle of oil and gas in terms of we'll call it semi trucks, right? So well, gas operations happen in the middle of nowhere. Where the oil and gas is often it's not where people are. And so we have to transport all the equipment to location to actually build many industrial sites for a short amount of time. rig up, it's very common term in the industry. But Larry, rig up all the heavy equipment and tie it all together, and then use it for its purpose, and then bring it down seven to 30 days later and take it out of there. So a drilling rig might have 60 semi trucks worth of equipment that are towed to do to location. And then they pieced it all together like a jigsaw puzzle and have a whole mud pump installation system and plumbing system. That's fascinating. So I studied mechanical engineering. And first time I was on site with the drilling rig. I was like, these are huge toys. This is incredible, like look at all this equipment.

Chris Keefer  23:32  

And very modular, right, like very modular,

Mark Hinaman  23:34  

incredibly modular. Yeah. So if you Google a picture of a drilling rig, many people think of drilling rigs as fracking towers. And that's a misnomer in industry, we don't use drilling rigs to frack at all we use them to construct the wellbore to give us the opportunity to frack but we don't use that same equipment. So drilling and drilling a well could take anywhere from three days to the two months, you know, if things go poorly, and most of that equipment people are paid by the day, so you want to drill wells as fast as possible. But once once the wells drilled and constructed, so they don't, they drill a hole in the ground, then they install pipe and you pump cement around the pipe that creates a pressure barrier and prevents fluids from moving up hole into the surface groundwater. And then you break down all this equipment taken away, and then come back with a frack fleet. And so that's what what is a frack fleet. That's about 20 to 30 additional pickup trucks or semi trucks that have heavy equipment on them. You'll have typically 15 to 20 pumps. So these are literally triplex pumps that will compress fluids, compress water into high pressure. They're all in a line. And they're all plumbed together in parallel and plumbed into one single line that goes to the wellbore and then can pump down a ton of water all at once. UPS stream of the pumps, you'll have what they call blender that brings together all of the material that you're going to put into the slurry string, which is really just water and sand. But we throw some chemicals in there to to help with the process. Mostly friction reducer, which is a polymer that will reduce the amount of friction, as you pump this water down into the well. It's a it's a phenomenal chemical. And if anyone's interested in chemistry, it's a fascinating study. But then upstream of the blender, you've had all the sand. And so where does the sand come from, and it's a ton of sand, like 12,000 tons of sand per well, like think, yeah. And there might be 40 tons of sand 40 to 60 tons of sand per truck that shows up and that all the sands trucked in, right, they get it from sand mines, typically in basin, but in the truck it 30 to 100 miles to location. And so there's just this constant stream of trucks going in and out of location while you're fracking, right. And you've got your water source that brings in water from either nearby water wells or recycled water that you've produced from other oil and gas wells. And so you have to stage that also. But you bring all this equipment together. And typically there's like 10 to 30 people running around the whole operation, making sure that, you know, all the pumps are rigged up in line and nothing's leaking, and they're operating the equipment. And then for one, well, it typically takes like five to 10 days, I use seven days is a good metric. But to frack you know, in during that time, you're just pumping as continuously as possible water and sand into the ground to fracture rocks. The fun part about this that I think of and the parallel that I draw to nuclear is in seven days think about this Chris, we pump and dispose of 12,000 tons of solid material into the subsurface. That is then virtually gone forever. Meaning when when when we turn the well back on, we might get some sand back, there might be some sand that's carried to surface but it's rather trivial amount, maybe several 100 pounds of 12,000 tonnes, you know that we pump in? Think about. So we've we've virtually removed that sand from the biosphere. And now it's in the subsurface in a geologic formation that has been there for millennia, right? This oil was there and from 70 million years ago and the Permian Basin is formed. We expect to never see it again. Can you think of another application that might be useful to use that in? Yeah, there's there another another material that we have that we might want to like dispose of? And? And like the arguing about how we're going to do it presently?

Chris Keefer  27:46  

I mean, deep isolation, like I can't imagine like powering up nuclear waste and using instead of sand. But is that what you're getting at? Or my way? Yeah, well,

Mark Hinaman  27:55  

no, I'm just you know, I can't do this, right. We're doing this every day and the only gas industry and yeah, it's different different grades material, right. But and so but think about how much waste there is. So in the US, you could say there's about 100,000 tonnes 90 to 100,000 tonnes of waste, and we dispose of 12,000 tonnes in a week in the powelton, subsurface. So when people talk about waste, I'm like, Guys, this is not a problem. versus just the sheer amount of material versus how much material we're moving in the oil and gas industry to get a miniscule amount of energy like, right,

Chris Keefer  28:32  

so to speak. Speaking of that energy, so a couple of things as well, like the lifespan of the Well, I think is interesting. Like is the landscape dotted with like, well, after Well, is it more of a visible

Mark Hinaman  28:42  

advantage? It's a big advantage of horizontal drilling. Yeah, but the industry tells us all the time is young. And in the old days, you had to have these checkered spots of you know, and going infill drill and have one vertical wellbore to drain a radial area. And with the horizontal wells, you can drain more area and have less of a surface footprint. That's awesome. It's it's absolutely good. But we're still scraping fresh, surface and fresher that wasn't disturbed before me to access some of these plays. And that's one thing that is bothersome to me with a land use perspective that I think nuclear is even better than oil and gas. And I love nuclear for that. When I fly over oil and gas plays and when you look at them from satellite views, you can see where this has happened. You can see all the pipelines, scarring and the weld pads and like that stuff doesn't go away. I mean, you can reclaim it, but the scarring is going to be there for several generations to come. So there's this this disturbance of the surface that we're doing in oil and gas that I mean, yes, we're disturbing less with horizontal wells, but it's still happening, versus if we use nuclear then.

Chris Keefer  29:45  

Okay, second question. You know, this energy returned on energy invested, I think it's always faster to think about what is the quality of the energy invested. And so when we have wind and solar, we end up in putting a ton of really, you know, high quality energy in the form thermal coal for the metallurgy, coal to make the polysilicon other other fossil fuels. And what comes out the other end the energy returned is I won't say it's useless, but it's this kind of spasmodic electrons only and not necessary when you need them and lots of curtailment. So, in terms of the energy in for fracking, how much like how big is the diesel generation? Is it a measure? I mean, everything can be measured in kilowatt hours, I guess. But what's the size of that power plant? You know, we were hearing about copper mines having like a 30 megawatts power plant to run the crushing and everything else. So how does how does fracking compare in terms of the energy needed?

Mark Hinaman  30:41  

Yeah, and some easy numbers to think about. For the fracking process, and to frack wells, that is the majority of the energy used in the process. Now, to drill wells, you know, a deep drilling rig is run on diesel, but they use about 1200 gallons of diesel a day. And again, if it takes a month to, to drill a well, then that's about 30,000 gallons of diesel. After the fracking process, for the life of the wells, there can be a large power demand for what's called artificial lift. So to eat, once the reservoir is initially pressured up from the fracturing process, it will flow naturally for a month to a year. But after after that, you want to produce this well, for another 3040 years to get more hydrocarbons out of it. There's what we call artificial lift. And there's, I mean, this is one of the pillars of oil and gas. Engineering is production engineering, they've developed a myriad of technologies to use for to aid in artificial lift. What and one of those second on the straw basically, on the straw. Yeah, and they all have a different power in versus power out demand. And you kind of go from the most power intensive at the beginning of the life the well because it's worth it, you get more out, and then kind of reduce your power intensity over time and use the least power intensive one over time. So but and that's a permanent installation, which is helpful, you can have wind power, you can build grid power to location for that. But oftentimes, it's expensive or long term, or you know, your power demand decreases over time, because it decreases over time, having a remote installation, like a diesel generator, or a micro nuclear reactor, on site or off site to power, that operation could be really helpful. But that's kind of on the order of call it half a megawatt down to, you know, 100 kilowatts, that for that long term power demand need per will. But during the fracturing operation, it's your power demand is between 20 and 30 megawatts of power. And think about how much energy that is, remember, power is energy per time, and you're not there for very long, you're only there for seven days to frack one well. So in seven days, it's never going to be economic to build line power to each location, and track them, which is why we use diesel and natural gas that's portable. You know, we're compressing the natural gas. And we'll bring the diesel out and trucks and we can burn in the same engine. But how much do we use them? Number that's helpful for listeners is in for one, well, about 150,000 gallons of diesel per well. And so when you think about energy return on energy invested, dollars is often a good proxy for this. It's not always and certainly not in the case for nuclear. But for oil and gas operations. Like I said, you could have a well, that pays back and call it three years that you get your money back and two to two to 6x your money. And of that $10 million dollars, the diesel cost currently is about $700,000. So but you're making a multiple, so you're putting that much energy in, which would be seven 10%, but then making a multiple of two to 6x on the total return. So that's why the numbers, you know, for hydrocarbons, it's more energy return on energy invested as people say it's like 30, right? 30 units and for every unit and you get 30 out, which kind of makes sense, right? 150,000 gallons of diesel in and then how much oil? Are you actually getting out of that that's then useful later. Right. So those numbers kind of kind of make sense. And if you sat down did the math, I think you'd get pretty close. Well,

Chris Keefer  34:31  

I mean, the key thing here in terms of the quality of the energy and versus the energy out is that you know, a wind turbine can create the energy that can reproduce itself. And oil and gas can fundamental staple. Basic right but it's something that's overlooked. I mean, there's lots of lots of Yeah. Okay, so let's move on a little bit to you know, again, we talked about, you know, the fracking industry, the oil and gas industry being dynamic, innovative, having problems solving them. You Having probably minimal regulations, certainly when compared to nuclear, I'm sure there's a bunch of regulation there. But I mean, no doubt that it's less than nuclear. So in a perfect world where there was sensible regulation for nuclear, what kind of lessons could the fracking revolution lend to, to nuclear to nuclear innovation to nuclear deployment, in your opinion,

Mark Hinaman  35:21  

what the first one that comes to mind is this idea of between collaborating versus competing. And so in the oil and gas sector, the shale revolution happened. And it took a decade and billions of dollars invested to make it happen. But it happened because people learned over and over again about how to drill wells better and produce them better. And there were lots of people in the industry that developed secrets or had. And this still happens, right, where they'll go and try and buy up a bunch of leases and develop land position, because that's valuable. Again, it's the property rights that's really valuable, that that gives them the chance to sell the the energy. But once they had the recipe, the technology was just iterated and improved on and this happens still where, and because you'll have these third party technology vendors that are trying to sell to the energy developer, their technology, and so they're working with every energy developer, to try and make their stuff better. And there's really, at its core, a lot of intrinsic collaboration that happens in the oil and gas industry, meaning all of the production data is public, there's no secrets about how much oil came out of each hole in the ground. There's now in some states, they can have a what they call a tight hole period, where they'll spend six to 12 months, tight hauling the production data's to give anyone that risk their capital, first, they have a chance then to go out and drill more wells or buy more land around it to try and give them a competitive advantage. But after that title, period, it becomes public and everyone can see how productive that well was. What else is public? Is the design that they used to actually frack the well. That's why we learned over time how to make these things better, and how to do it more effectively. I draw that parallel to the nuclear industry. And that, I mean, yeah, there's ans conferences, and people are talking about different technologies they're using, but all that I see in the nuclear industry is people trying to build drilling rigs, and not people going out and actually selling energy. Meaning there's, there's a missing piece in the developer space, there's a missing piece in the collaboration space, there's a missing piece and the supply demand the who the actual customers are, who they can be. And there's a huge missing piece and kind of project management. You know, it feels like there's a lot of OEMs original equipment manufacturers that exist, and not a lot of energy developers. So

Chris Keefer  37:57  

yeah, yeah, I mean, certainly, we hear this phrase, there's no natural constituency for nuclear, or there is no nuclear industry, partially because we're not building anything. You know, and partially, because, again, they're not actually in the business of selling the electrons, it's the utilities and the utilities, you know, aren't particularly committed to nuclear, if it's less economic than, say, gas. So that that certainly rings true for me. And then just a time, like, you know, I was gonna ask kind of, you know, what, what else is kind of holding nuclear back, but I think in the interest of time, and just drilling in on your expertise, interested in moving along a little bit. So we talked a little bit about regulation, holding things back, it'd be interesting to hear sort of, you know, having studied both on your on your side of things, you know, how oil and gas regulation compares to, to, you know, nuclear and NRC type regulation, whether you feel like, you know, whether you feel like the limitations of nuclear can be overcome with the existing. Maybe this is a leading question, right. But the existing regulations in place your thoughts on a Nuclear Regulation?

Mark Hinaman  39:00  

In short, no, it's a disaster. So, when you think about what, why is nuclear more expensive to build, if the energy and versus energy out is better? And my take is, there's just so much other energy that goes into all of the paperwork and regulation behind it, feeding studies, and like taking up more time, that's literally adding energy to the system in you know, and you're getting less out, right? So like, if we just went clean slate did it and said, Hey, go build that. And if you kill someone, then we're gonna sue you, then and you'll be held responsible, like every other industrial activity that exists generally right? I mean, that this is like a change in mindset of asking for forgiveness versus asking for permission. The nuclear industry is one of the only ones that not only asked for permission, but actively looks around it. You know, how they're not gated off and how they're not safe enough and tries to make it even more honor us to do their job. Which I think that's misalignment of incentives. I mean, I agree with Kugelmass, almost 100% on this with his view of it. And that's coming from, you know, one of my mentors as a Nuclear Safety Engineer and has spent her career selling safety and safety upgrades. And she, she agrees. It's like, yeah, there's this perverse incentive in the industry. So. So how do we how do we fix that, then? I think having a dual mandate with the regulator, and specifically the Nuclear Regulatory Commission to change that institution, to say, not only are we going to protect, but we're also going to promote and do a cost benefit analysis of how good is this compared to other energy technologies and other solutions? And if we can get this built faster, then can we go easy on some of the regulations? I think that's that's the solution in my mind currently. Because I don't think all of the regulations now actually make it safer.

Chris Keefer  41:02  

Okay, another another question that just popped to mind. Certainly, Rod Adams is big on, you know, this, I won't call it a conspiracy theory. But, you know, the Rockefellers role in trying to suppress nuclear energy by, you know, funding, Herman Muller, the beer reports. And this idea, again, of the linear no threshold hypothesis, that's kind of far in the past, there's probably more recent examples of some campaigns against nuclear plants opening that were funded by the coal industry, to what degree is nuclear held back by not just the competition from fossil fuels in terms of cheap available, abundant natural gas, for instance, but anything kind of lurking behind the scenes? Or is nuclear just like just such an irrelevant? Business model? Yeah,

Mark Hinaman  41:42  

yeah, they're their own worst enemy. I don't understand the business model. And I want to change that. But I also the stigma that there's a shadowy oil and gas executive, or will say the industry as a whole thinks that we need to hold nuclear down or hold him back to save our assets and make our assets may maintain value is much more conspiracy theorist than I think a lot of people will give it credit for. Now, there's certainly been examples, like you said, the Rockefellers that are funding stuff, but from my own exposure, and I've written articles on this, that every time that I talked to someone in oil and gas, they're all for nuclear. And we're trying to change that stigma. There's gentleman in Denver, and I, that I've written kind of an open letter, and we're working on getting signatures now, but from oil and gas executives, endorsing nuclear as a technology and advocating to the US and the world that we use more of it. So

Chris Keefer  42:37  

So what's in there? Yeah, is this just charitable? Or what's in their interest? To promote nuclear? I mean, you know, I've always miles old, so go ahead. Most

Mark Hinaman  42:46  

people and most people on oil and gas, I mean, are in the business because they like energy, they like technology, they, you know, they like and also making money, right? That's fantastic. And if they can make money doing nuclear, then they would, and they're pragmatic and highly technical and understand the cost benefits behind everything. And so if, if there were an industry to invest in, and they could make as much money doing it, then I think many of these energy companies 100%

Chris Keefer  43:15  

Right. Alright. So we've talked a little bit about, you know, some nice rolls. I mean, it does seem like a maybe not a great value proposition to bring in Miko modular reactor and for that first week of the drill in the frack, where it's very energy intensive, but, you know, in terms of refining,

Mark Hinaman  43:30  

I disagree, I'd want to put on my reactor on every drill and Frack site. So,

Chris Keefer  43:34  

okay, okay. I guess it depends on whether you need to bring in like a nuclear engineer to like, operate it, etc. We'll leave that aside. But yeah, right. Yeah, exactly. In terms I mean, x energy is signed deals with Dow Chemical to provide process heat with nuclear, I guess that's a potential synergy of nuclear and the traditional energy sectors. I'm just trying to wrack my brain here to again, I love challenging my biases. Let's let's pivot to climate and climate concern. There's a new term out now called Climate Solutions, denialism. So if you're critical of renewables, you know, we found another way to slag you and label the denier label on. So, you know, I, very early in the podcast, I had to make a decision about you know, especially, you know, I'm still very climate concerned. But you know, there's a kind of taboo on the left amongst progressives amongst the climate Ariad. You know, I shouldn't be talking to you Mark, because you're an evil guy with, you know, oil stains on your hand, blah, blah, blah. I quickly rejected that. Because I find people within energy, maybe people in the political right, have more engineering discipline, understand how the sausage gets made, and I want to understand how the sausage gets made. And I think some of the I think most people nowadays recognize that human beings are having an impact on the climate but you know, global warming is going to have major repercussions maybe not in the next decades, but it's out there. But I think people All who are energy literate, understand that, you know, an energy crisis, certainly an approximate timescale is gonna cause me more harm. I mean, just the fact of you know, fertiliser, consuming 1% of global primary energy being utterly dependent on natural gas for the foreseeable future, you know, extinction rebellion says for 4 billion people are gonna die by, you know, 2030 2040, the prophecy will be fulfilled if we kept it on the ground, essentially. And I think, in terms of my charitable read of why people are not necessarily climate skeptics, but not climate alarmists, or for taking the kind of drastic actions prescribed by, you know, the climate organizations. Is that does that ring true for you? Or where do you sit in terms of the climate so how

Mark Hinaman  45:40  

I've dealt with climate change, and I'm not a climate data analyst, I I've read the IPCC reports, I understand them, I appreciate them. I really like the science that the world has done around it. And I think we should limit emissions. And I love Mark Nelson's take that I don't know that playing an experiment with our atmosphere is a good technique area is a good idea, changing the makeup of our atmosphere, but what I, what has driven me in my life, and my career, and why I chose to get educated the way I did, and the way that I choose to spend my nights and weekends, my day job is, energy is just so good. And the value that it brings to the world is incredible. And if we can bring more energy to more humans, then that immediately betters their lives, like overnight. And the cleaner the energy is, the better but more important than cleaner. And you see this in real life examples globally, the more energy you get out for the energy that you put in, the more usable it is, the higher quality energy, the less entropy you created, the better human lives are. And so we see that with oil and gas globally. That's to me fundamentally, significantly more important than the climate conversation, which is there's still 2 billion people in the world that are living in abject poverty. And a fundamental driver for that, is they don't have enough energy. And you know, there's more people are killed annually from air pollution, then from then how many were killed by COVID? I mean, I find that to be still unacceptable, and it's still happening. And so how can we fix that we can convert to natural gas and power plants, but we can also convert to nuclear. And we can bring people more energy faster. So I hear the climate conversation. But I frankly, I think it's a big distraction from the bigger problem. That is, there are humans that are suffering globally now that are in energy poverty, and because we're not helping them, and we're not focusing on that problem, we're focusing on reducing emissions instead, rather than bringing them more energy, like they're suffering because of that. And that's immoral to me. Meaning, if we're going to chase something, if we're going to solve the problem, like uplift the rest of the world out of poverty, with more energy use. So if that comes at the expense of increasing emissions, short term or long term, I'm confident being an engineer and scientists, I'm confident we will invent new technologies that are awesome, and can scrub that scrub the atmosphere and dispose of toxins and make it safe for humans to live. But I mean, man, if you're not getting clean water, if you can't move your family, if you can't get food to your home, if you can't heat your home in the winter, because you can't afford energy. Like, that's terrible. You know, that's, that's my take. And, and so that I don't disagree with the climate argument. I love that it's gaining mainstream acceptance, and that, you know, people are aware of it, but I don't see it as a good solution for especially wind and solar, helping solve from an environmental perspective, like the problems getting more energy and like making the environment a better place. It just doesn't happen. But you know, from a perspective of, well, let's use it to help the argument to support more nuclear. I love that. I'll cherry pick that. But that's because I think nuclear has so much potential from its energy density. So well, there's

Chris Keefer  49:09  

been all these accidental decarbonisation with nuclear, certainly the electricity by people who didn't give a hoot about climate or it wasn't on the radar. At that

Mark Hinaman  49:17  

point, they want to sell their natural gas, which so this is a hot topic. And I say this all the time, like the renewable movement is one of the best things that has ever happened for the natural gas industry. I just looked back at it, and it's like, wow, thank you, we really appreciate it. We're gonna sell tons more natural gas, because this technology is inferior. And thanks for the free ride, you know, like, and we get to tell at the PR that we're decarbonizing or did more to decarbonize along the way, which is true, but like, it's just baffling to me that, you know, proponents that are truly behind climate change and want to solve climate change, aren't rallying around nuclear full stop to eliminate emissions and still even talk about renewables. So though, you know,

Chris Keefer  50:00  

pivoting back to nuclear for a second, but in the ending, and we've talked a little bit about what what constraints that what holds it back, that in your opinion, there's not like a fossil fuel conspiracy. That's, you know, almost the opposite with renewables. I doubt there's a conspiracy to secretly supportive. They Yeah, but that's called the environmental movement, right? I mean, for me, fundamentally, this is a question like nuclear gets built, when there's demand when you know, you're, you're gonna put in some capital costs, and you're gonna put some kilowatts out, you're gonna sell those kilowatt kilowatts. And I don't think I've seen a single example of that demand being there purely from a climate concern. Certainly, there's lots of subsidies. But again, that's an economic concern. Even here in Ontario, I was thinking about it, you know, we made burning coal illegal that was enabled by nuclear, but we already had the plants. They just been mothballed. Because we didn't need the electricity. Maybe coal was temporarily cheaper. Maybe there was just a, you know, under what does that tell

Mark Hinaman  51:00  

you the rest of what people really care about? They care about climate or they care about energy.

Chris Keefer  51:03  

Right, and where are they willing to make the sacrifices? So I mean, that's what makes me bear. Like, frankly, I'm, you know, I'm hopeful for nuclear, but I'm often quite, you know, pessimistic or bearish in terms of, you know, real world deployments, that demand is not going to be there because of climate change. Realistically, it's unlikely to be there in terms of, you know, swap out for fossil fuels voluntarily. Like I said, the Ontario example, there's a lot of political events that if

Mark Hinaman  51:29  

we get behind it, and we we make it better, and we we decriminalize it, I love Alex's phrasing of the sound flex phrasing. If we decriminalize it and reduce the burden to get there, then we'll innovate, make it cheaper, we'll build it even better. And I'm kind of a futurist and very optimistic, very bullish on the world and humans. I think about everything that we could build, and how much value we could bring to the world if we deployed more nuclear like, it's just unbelievable. It's very exciting. And so yeah, I don't know, I didn't I don't know what your question was. But that's what comes to mind.

Chris Keefer  52:02  

I also don't know my question is either, let's, let's start to wrap it up, give you a chance to kind of toot your horn about what you're up to fire to efficient, very nice catchy summary of of your your philosophy, but just take a couple minutes to walk us through what it is what your plans are.

Mark Hinaman  52:21  

So fire division. Now we've got a small team, all volunteer driven, we're not many of us come from the oil and gas sector. But we're not financially incentivized at all. But we're acting as an advocacy group for the nuclear industry. Meaning we want to build more, we want to see more built, and we want to transform how people are thinking about this. And we're doing that right now. So several of us live in Colorado. But we've got people helping us kind of all across all across the country, in the United States. And we're launching a podcast to interview experts in the nuclear industry, learn more have more of these conversations. But really, our goal is to expand this thinking around, there's huge value in energy dense fuels. So let's chase that. And let's make that the conversation and highlight how much good we can bring the world from that. And, you know, a project that we're working on right now in Colorado, is transforming the state legislators opinion about nuclear. So we've got a little advocacy group that is helping us kind of grassroots effort. Because something something strange happened, Chris, on Valentine's this Valentine's Day this year, in 2023. There was a bill brought before the State Senate that they wanted to change the definition of clean energy and just add to the state's definition of clean energy, nuclear, like it was adding a couple of words to the bill. Very simple decision, right? I mean, people are making this decision globally. Why wouldn't Colorado with this environment very environmentally friendly state, right, we've got unreal here we've got CU Boulder, where I went to school very is very well known for being pro environment. There was it was brought to committee, and there was five Democrats, two Republicans on the committee, and it was voted down five, five to two, all the Democrats voted against it. 12 people testified in favor of it, including Phil Ward, who's the leader of Americans for nuclear energy here in Denver, and Nuclear Energy Institute, and people called in there were tons of supporters in the room for it, and only two people testified against, and yet it was voted down. And not the I was baffled. I was floored. And so that's really energized me and made me want to use this platform fire division and get people behind this to say how this this was wrong. What Why did this happen? So I went talk to one state legislators afterwards that the senator that was the chair of the committee, and I asked, Well, why was it voted down? And she's like, well, I don't know that it's safe. I don't know, what about the waste? How do you know it's clean? I don't know it's clean. If I go back to my constituents in Broomfield, and I don't know that it's going to be clean, i Nobody. And then she said, Nobody lobbied us, nobody got in front of us ahead of time. And so that spoke to me and said, there's a problem in the industry, the nuclear industry, including part of the grassroots effort, that we're not getting in front of people fast enough, far enough, or effective and effectively enough to actually affect change. And I think this is happening in New Mexico, with the bill that they just passed, preventing any new nuclear material to bring into the state, which effectively nullifies any value that the whole tech facility has there. And I'm thankful that it's not happening everywhere in the UK just had an announcement that they want to make nuclear part of the green are classified as green, but there's a deficiency, you know, in Colorado and my home right now. And so we're starting at home and trying to trying to transform that there's another bill that's coming up in the house that's gonna be voted on on April 6, and you can call him and testify remotely. And so if this is released before, then then I hope that everyone does, and you know, we can get a lot of voices and get a lot of support for it. That that that bill is just to study, clean energy and dispatchable firm energy in the state advocating the current Energy Office does that. So those are examples of you know, we're, we're writing legislators, I'm sitting here in a suit jacket, I'm gonna go and talk to go to the state capitol and try and talk to these legislators on the committee that are gonna vote on this in a couple of weeks. You know, we're doing emails, phone calls. And then like I said, we've got the podcast, that's kind of our public facing piece. It's not live yet we plan to start polishing episodes in q2. But that is our effort to add to this conversation, you know, bring some sobriety in some, some technical expertise, certainly, but perhaps a more vigorous view to the conversation. Because ultimately, I mean, a lot of us don't want to work in oil and gas, we want to go build nuclear power plants, or we want to build them and bring them into facilities to make make them even more profitable, you know,

Chris Keefer  57:05  

right, right. No, I mean, it's, it's, it's a beautiful thing. It's also a sad thing, because like the number of charitable organizations out there, supporting the nuclear industry is pretty stunning. Right? Yeah. Sometimes I look at myself in the mirror and say, What the hell are you doing with your time but it weren't true believers. That there's a there's a logical narrative that gets us there. Thank you for explaining yours today. I have a strong Inkling. We'll be having you back mark. It's been a lot of fun. And I got a lot to talk about. No doubt

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